Key retail industry brand files Chapter 11 bankruptcy

The Waltham, Mass., provider of e-grocery fulfillment solutions for major grocery store chains files Chapter 11 bankruptcy seeking a sale of its assets.

May 31, 2024 - 14:30

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When economic hardship impacts retail chains, major grocery stores are often spared from bankruptcy court as patrons need to continue shopping for their everyday essential goods.

The most recent notable grocery store bankruptcy, however, was Foxtrot and Dom's Kitchen and Market's Chapter 7 liquidation filing on May 14 in the U.S. Bankruptcy Court for the District of Delaware.

Foxtrot Market, which operated 33 locations in Chicago, Washington, Dallas and Austin, abruptly closed its doors in April without giving workers any notice. The company said it explored various options to continue but was not able to find a path forward "despite good faith and exhaustive efforts."

In some cases, financial hardship hits grocery store vendors that provide essential services to the retailers.

Financial distress has forced Takeoff Technologies, a leading provider of e-grocery fulfillment solutions for major grocery store chains worldwide, to file for Chapter 11 bankruptcy seeking a sale of its assets.

Takeoff Technologies files Chapter 11 to seek a sale

The Waltham, Mass., debtor and five affiliates on May 30 filed their petition in the U.S. Bankruptcy Court for the District of Delaware after reporting significant operating losses in 2022 and 2023 and owing about $12.9 million in trade debt and unliquidated, unsecured claims. The company did not report any secured or funded debt obligations.

The debtor sells, maintains and supports equipment and software needed to operate microfulfillment centers, which are small, automated robotic warehouses in grocery stores or near end-shoppers, the declaration said. The company employs about 300 workers at dozens of sites in eight countries on four continents.

Takeoff Technologies said it plans to seek a sale of one or more of its assets through a marketing process while continuing to operate through approval of up to $9.6 million in debtor-in-possession financing from a consortium of its customers, including Woolworths Group, Albertson's Cos. (ACI) , Village Super Market, ShopRite of Hunterdon County and Inserra Supermarkets, according to a declaration by the debtor's Chief Restructuring Officer Brett M. Anderson of Huron Consulting Services.

If no qualified or viable bidders emerge in the marketing process, the DIP lenders have the option to acquire some or all of the debtor's assets. The debtor plans an orderly winddown of any assets that are not acquired through the sale process.

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Before filing Chapter 11, the debtor sought strategic alternatives to address its financial issues and was not able to obtain additional equity funding. It also held discussions with key partners and customers seeking a sale of some or all of its assets.

The company determined that filing for Chapter 11 bankruptcy was its best option to seek a sale of its assets.

The company's revenue had declined over the past two years, generating $40.6 million in gross revenue in 2022 and $27.26 million in 2023, while reporting operating losses of $57.8 million in 2022 that grew to a $63 million operating loss in 2023.

The debtor's financial results were associated with early stages of a software company and customary growing pains, the declaration said. The company, founded in 2016, historically financed its business with the sale of preferred stock and convertible notes.